Mortgage rate isn't everything, experts warn

29 April 2009 / by Rebecca Sargent
The best mortgage rate is not always the best buy, Yorkshire Building Society has warned.

According to Yorkshire Building Society, mortgage shoppers should look at the true cost of a mortgage, instead of being taken in by headline grabbing interest rates.

Tom Girling, mortgage manager at Yorkshire Building Society said: "The headline rate of a mortgage isn't necessarily an indication of what a mortgage will actually cost the consumer.

"By looking at the true cost of a mortgage over the course of a deal it will allow the borrower to see exactly how much they will be paying."

According to Mr Girling, things like fees should be taken into account too: "Consumers should look at all costs and special offers over the term, such as arrangement fees, valuation fees and any cashbacks, as well as the initial headline rate," he said.

Examples of two year fixed rate mortgage deals with attractive rates but less attractive overall costs include HSBC's mortgage with a market leading interest rate of 2.89 per cent.

However, when all costs are taken into account, Yorkshire Building Society ranked the mortgage deal number seven for overall value.

In contrast, a Yorkshire Building Society mortgage, offering an interest rate of 3.59 per cent for a two year fix, ranked number one when it came to overall value.

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